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	Legal Malpractice Plaintiff's Discovery Needs Trump Nonparty's Financial Privacy Rights Professional Liability  By Allen L. Michel Holding Summary The California Court of Appeal, 4th District, last week upheld a trial court's ruling requiring a third party to provide financial records and insurance policies in response to a subpoena issued by a plaintiff in a legal malpractice case. The Court of Appeal held in Hecht, Solberg, Robinson, Goldberg and Bagley v Superior Court that the legal malpractice litigant's need to prove, in his legal malpractice action, that proper handling of his case would not only have resulted in a more favorable judgment, but that the more favorable judgment would have been collectible, justified the plaintiff's requests from a nonparty for otherwise private documents. Hecht, Solberg, Robinson, Goldberg and Bagley v Superior Court, 2006 Cal. App. LEXIS 316. Facts In Hecht, the third party (the Hecht Solberg law firm) had previously been sued by the plaintiff for legal malpractice. The plaintiff settled that case in 2001, allegedly on the advice of attorneys then representing him. Then, in 2002, he sued those attorneys, claiming that their malpractice had induced him to settle his first malpractice action for far too little. Recognizing his need to establish in the second malpractice case the extent to which any judgment against the Hecht firm would have been collectible, the plaintiff served a subpoena on Hecht for the firm's malpractice insurance policies, and for financial statements and related records created by the Hecht firm during the years Hecht had represented him. The trial court granted the plaintiff's motion to compel compliance with its subpoenas, overruling the Hecht firm's objections. (Notably, the order requiring delivery of the subpoenaed documents included a confidentiality provision.) The Hecht firm petitioned for a writ of mandate, seeking a reversal of the discovery order. Result Finding a paucity of clear law on the issue, the Court of Appeal issued an opinion essentially affirming the trial court's approach. Although the Hecht firm's records are protected by some level of financial privacy, that protection is not absolute. According to the Court of Appeal, the discoverability of the documents flows from a "proper balancing" of the requested discovery, their relevance to the subject matter of the pending action, and the nature of the documents in question. Here, the "collectibility issue" was a crucial factor in the malpractice case, and there were no constitutional or statutory privacy rights at stake. Discussion For over half a century the law has been clear that when a claim of malpractice is based on the defendant attorney's failure to properly handle a case seeking money damages, the plaintiff in that legal malpractice case must show, in addition to the normal elements of duty and breach of duty, that the underlying defendant would have had sufficient assets to respond to the theoretical judgment the plaintiff contends should have been awarded. This "collectibility" doctrine is at the heart of the Hecht decision, because the documents in question bear directly on the causation and damages elements of the plaintiff's claim for malpractice against his second set of attorneys--or at least the documents could lead to the discovery of relevant information on the collectibility issue. Ironic Twist The decision is counterintuitive in one sense: In the earlier litigation by the plaintiff against the Hecht firm, information about the firm's assets would probably have been completely undiscoverable. Except for insurance information (such as policy limits), a defendant's ability to pay any subsequent judgment against it is considered irrelevant, so discovery on that issue is, in most cases, quite limited (unless and until, for example, the plaintiff establishes a right to seek punitive damages, or until post-judgment debtor exams are commenced). Here, having settled the case against it, the Hecht firm was nevertheless required to provide its former adversary documents it did not want to share, despite the absence of any finding of fault on its part in its prior representation of the plaintiff. Of course, from the perspective of the legal malpractice plaintiff, the decision seems sound. And the same rationale may be used by a legal malpractice defendant to prove that the underlying defendant was judgment proof and that, therefore, no matter how negligent the defendant lawyer might have been, the plaintiff has no valid legal malpractice claim. ©2006 Berger Kahn, A Law Corporation. All Rights Reserved. Back
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